82 FR 44010 - Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Financial Industry Regulatory Authority, Inc.; Order Approving Proposed Rule Changes, as Modified by Amendments, To Adopt a Consolidated Audit Trail Fee Dispute Resolution Process
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 181 (September 20, 2017)
Federal Register Volume 82, Issue 181 (September 20, 2017)
| Page Range | 44010-44013 | |
| FR Document | 2017-19968 |
[Federal Register Volume 82, Number 181 (Wednesday, September 20, 2017)] [Notices] [Pages 44010-44013] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-19968] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-81616; File Nos. SR-CHX-2017-11; SR-FINRA-2017-020] Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Financial Industry Regulatory Authority, Inc.; Order Approving Proposed Rule Changes, as Modified by Amendments, To Adopt a Consolidated Audit Trail Fee Dispute Resolution Process September 14, 2017. I. Introduction On June 5, 2017 \1\ and June 19, 2017,\2\ Chicago Stock Exchange, Inc. (``CHX'') and Financial Industry Regulatory Authority, Inc. (``FINRA'') (each, ``SRO'' or ``Participant;'' collectively, the ``Participants'') \3\ filed with the Securities and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') \4\ and Rule 19b-4 thereunder,\5\ proposed rule changes to establish the procedures for resolving potential disputes related to CAT Fees charged to Industry Members.\6\ The proposed rule change submitted by CHX was published for comment in the Federal Register on June 19, 2017.\7\ The proposed rule change submitted by FINRA was published for comment in the Federal Register on July 6, 2017.\8\ Pursuant to Section 19(b)(2) of the Act,\9\ the Commission designated a longer period within which to approve, disapprove, or institute proceedings to determine whether to approve or disapprove the proposed rule changes.\10\ The Commission received no comments in response to the proposed rule changes. On September 6, 2017, CHX filed Amendment No. 1 to its proposed rule change,\11\ and on September 13, 2017, FINRA filed Amendment No. 2 to its proposed rule change.\12\ This order approves the proposed rule changes, as modified by the Amendments.\13\ --------------------------------------------------------------------------- \1\ Chicago Stock Exchange, Inc. filed its proposed rule change on June 5, 2017. \2\ Financial Industry Regulatory Authority, Inc. filed its proposed rule change on June 19, 2017. \3\ The Commission notes that Bats BYX Exchange, Inc. (``Bats BYX''), Bats BZX Exchange, Inc. (``Bats BZX''), Bats EDGA Exchange, Inc. (``Bats EDGA''), Bats EDGX Exchange, Inc. (``Bats EDGX''), BOX Options Exchange LLC (``BOX''), C2 Options Exchange, Inc., Chicago Board Options Exchange, Incorporated (``CBOE''), Investors Exchange LLC (``IEX''), Nasdaq ISE, LLC (``ISE''), Nasdaq MRX, LLC (``MRX''), Miami International Securities Exchange, LLC (``MIAX''), MIAX PEARL, LLC, The NASDAQ Stock Market LLC (``Nasdaq''), NASDAQ BX, Inc. (``BX''), Nasdaq GEMX, LLC (``GEMX''), NASDAQ PHLX LLC (``Phlx''), New York Stock Exchange LLC (``NYSE''), NYSE Arca, Inc. (``NYSE Arca''), NYSE MKT LLC (``NYSE MKT'') and NYSE National, Inc. are also deemed ``Participants'' for purposes of this Order as they, like CHX and FINRA, are also Participants of the National Market System Plan Governing the Consolidated Audit Trail (``CAT NMS Plan'' or ``Plan''). See infra note 17. The Commission also notes that CHX refers to Participants of the Plan as ``Plan Participants'' in its proposal. \4\ 15 U.S.C. 78s(b)(1). \5\ 17 CFR 240.19b-4. \6\ Bats BYX, Bats BZX, Bats EDGA, Bats EDGX, BOX, CBOE, IEX, ISE, MRX, MIAX, Nasdaq, BX, GEMX, Phlx, NYSE, NYSE Arca and NYSE MKT also submitted proposed rule changes to establish procedures for resolving potential disputes related to CAT Fees charged to Industry Members. See Securities Exchange Act Release Nos. 80780 (May 26, 2017), 82 FR 25382 (June 1, 2017); 80781 (May 26, 2017), 82 FR 25369 (June 1, 2017); 80782 (May 26, 2017), 82 FR 25379 (June 1, 2017); 80837 (June 1, 2017), 82 FR 26526 (June 7, 2017); 80836 (June 1, 2017), 82 FR 26539 (June 7, 2017); 80834 (June 1, 2017), 82 FR 26542 (June 7, 2017); 80835 (June 1, 2017), 82 FR 26549 (June 7, 2017); 80833 (June 1, 2017), 82 FR 26529 (June 7, 2017); 80831 (June 1, 2017), 82 FR 26536 (June 7, 2017); 80832 (June 1, 2017), 82 FR 26523 (June 7, 2017); 80936 (June 15, 2017), 82 FR 28153 (June 20, 2017); 80952 (June 16, 2017), 82 FR 28540 (June 22, 2017); 80967 (June 19, 2017), 82 FR 28719 (June 23, 2017); 80968 (June 19, 2017), 82 FR 28705 (June 23, 2017); 80970 (June 19, 2017), 82 FR 28708 (June 23, 2017); 80971 (June 19, 2017), 82 FR 28698 (June 23, 2017); and 80966 (June 19, 2017), 82 FR 28702 (June 23, 2017). \7\ See Securities Exchange Act Release No. 80916 (June 13, 2017), 82 FR 27904 (``Notice''). \8\ See Securities Exchange Act Release No. 81053 (June 29, 2017), 82 FR 31366. \9\ 15 U.S.C. 78s(b)(2). \10\ See Securities Exchange Act Release No. 81163 (July 18, 2017), 82 FR 34343 (July 24, 2017); 81275 (August 1, 2017), 82 FR 36836 (August 7, 2017). See also Securities Exchange Act Release No. 81110 (July 10, 2017), 82 FR 32598 (July 14, 2017); 81112 (July 10, 2017), 82 FR 32592 (July 14, 2017); 81113 (July 10, 2017), 82 FR 32596 (July 14, 2017); 81156 (July 18, 2017), 82 FR 34337 (July 24, 2017); 81157 (July 18, 2017), 82 FR 34338 (July 24, 2017); 81158 (July 18, 2017), 82 FR 34339 (July 24, 2017); 81159 (July 18, 2017), 82 FR 34338 (July 24, 2017); 81161 (July 18, 2017), 82 FR 34337 (July 24, 2017); 81162 (July 18, 2017), 82 FR 34336 (July 24, 2017); 81164 (July 18, 2017), 82 FR 34346 (July 24, 2017); 81165 (July 18, 2017), 82 FR 34345 (July 24, 2017); 81166 (July 18, 2017), 82 FR 34345 (July 24, 2017); 81167 (July 18, 2017), 82 FR 34337 (July 24, 2017); 81178 (July 20, 2017), 82 FR 34715 (July 26, 2017); 81179 (July 20, 2017), 82 FR 34716 (July 26, 2017); 81180 (July 20, 2017), 82 FR 34728 (July 26, 2017); and 81181 (July 20, 2017), 82 FR 34727 (July 26, 2017). \11\ Amendment No. 1 is available on the Commission's Web site for CHX at: https://www.sec.gov/comments/sr-chx-2017-11/chx201711-2433023-161039.pdf. \12\ Amendment No. 2 replaced and superseded Amendment No. 1 in its entirety. Amendment No. 2 is available on the Commission's Web site for FINRA at: https://www.sec.gov/comments/sr-finra-2017-020/finra2017020-2442749-161061.pdf. \13\ The Amendments amended the original filings to make technical changes to the proposed rule changes. Specifically, each Participant amended the proposed rule text to remove references to proposed ``Consolidated Audit Trail Funding Fees,'' as such fees are currently suspended, and replaced such term with the phrase ``any fees contemplated by the CAT NMS Plan and imposed on Industry Members pursuant to [SRO] Rules.'' See infra note 18. Each Participant also removed references to ``Consolidated Audit Trail Funding Fees'' from paragraphs (a)(1), (b) and (c)(1) of the proposed rule text. The Amendments are not subject to notice and comment because they are technical amendments that do not materially alter the substance of the proposed rule changes or raise any novel regulatory issues. The Commission notes that on August 30, 2017, the Commission approved the proposed rule changes filed by the other Participants to the CAT NMS Plan to establish procedures for resolving potential disputes related to CAT Fees charged to Industry Members, as modified by such amendments. See Securities Exchange Act Release No. 81500 (August 30, 2017), 82 FR 42143 (September 6, 2017) (order approving proposed rule changes by Bats BYX, Bats BZX, Bats EDGA, Bats EDGX, BOX, CBOE, IEX, ISE, MRX, MIAX, Nasdaq, BX, GEMX, Phlx, NYSE, NYSE Arca and NYSE MKT to adopt a Consolidated Audit Trail Fee Dispute Resolution Process), at 42144 n.19. See also supra note 6. --------------------------------------------------------------------------- II. Description of the Proposed Rule Changes, as Modified by the Amendments \14\ --------------------------------------------------------------------------- \14\ The Commission notes that for purposes of this Order, unless otherwise specified, capitalized terms used in this Order are defined as set forth in the proposals, as modified by the Amendments, or in the CAT NMS Plan. See supra notes 11-12; see also infra note 17. --------------------------------------------------------------------------- The Participants filed with the Commission, pursuant to Section 11A of the Act \15\ and Rule 608 of Regulation [[Page 44011]] NMS thereunder,\16\ the CAT NMS Plan.\17\ The Plan is designed to create, implement and maintain a consolidated audit trail (``CAT'') that would capture customer and order event information for orders in NMS Securities and OTC Equity Securities, across all markets, from the time of order inception through routing, cancellation, modification, or execution in a single consolidated data source. The Plan accomplishes this by creating CAT NMS, LLC (``Company''), of which each Participant is a member, to operate the CAT. --------------------------------------------------------------------------- \15\ 15 U.S.C. 78k-1. \16\ 17 CFR 242.608. \17\ See Letter from the Participants to Brent J. Fields, Secretary, Commission, dated September 30, 2014; and Letter from Participants to Brent J. Fields, Secretary, Commission, dated February 27, 2015. On December 24, 2015, the Participants submitted an amendment to the CAT NMS Plan. See Letter from Participants to Brent J. Fields, Secretary, Commission, dated December 23, 2015. The Plan was published for comment in the Federal Register on May 17, 2016, and approved by the Commission, as modified, on November 15, 2016. See Securities Exchange Act Release Nos. 77724 (April 27, 2016), 81 FR 30614 (May 17, 2016); 79318 (November 15, 2016), 81 FR 84696 (November 23, 2016). --------------------------------------------------------------------------- Under the CAT NMS Plan, the Operating Committee of the Company (``Operating Committee'') has the discretion to establish funding for the Company to operate the CAT, including establishing fees that the Participants and Industry Members will pay (``CAT Fees'').\18\ Section 11.5 of the CAT NMS Plan requires the Participants to adopt rules requiring that disputes with respect to fees charged to Industry Members pursuant to the CAT NMS Plan be determined by the Operating Committee or a designated Subcommittee. Section 11.5 of the CAT NMS Plan also states that decisions by the Operating Committee or a designated Subcommittee on such matters shall be binding on Industry Members, without prejudice to the right of any Industry Member to seek redress from the Commission pursuant to Rule 608 \19\ or in any other appropriate forum. The Participants filed the proposed rule changes to establish the procedures for resolving potential disputes related to CAT Fees charged to Industry Members. --------------------------------------------------------------------------- \18\ Section 11.1(b) of the CAT NMS Plan. The Commission notes that the Participants filed proposed rule changes to adopt fees to be charged to Industry Members, including Industry Members that are Execution Venues. See Securities Exchange Act Release Nos. 80691 (May 16, 2017), 82 FR 23344 (May 22, 2017); 80710 (May 17, 2017), 82 FR 23639 (May 23, 2017). See also Securities Exchange Act Release Nos. 80675 (May 15, 2017), 82 FR 23100 (May 19, 2017); 80697 (May 16, 2017), 82 FR 23398 (May 22, 2017); 80692 (May 16, 2017), 82 FR 23325 (May 22, 2017); 80696 (May 16, 2017), 82 FR 23439 (May 22, 2017); 80693 (May 16, 2017), 82 FR 23363 (May 22, 2017) 80698 (May 16, 2017), 82 FR 23457 (May 22, 2017); 80694 (May 16, 2017), 82 FR 23416 (May 22, 2017); 80721 (May 18, 2017), 82 FR 23864 (May 24, 2017); 80713 (May 18, 2017), 82 FR 23956 (May 24, 2017); 80715 (May 18, 2017), 82 FR 23895 (May 24, 2017); 80726 (May 18, 2017), 82 FR 23915 (May 24, 2017); 80725 (May 18, 2017), 82 FR 23935 (May 24, 2017); 80785 (May 26, 2017), 82 FR 25404 (June 1, 2017); 80784 (May 26, 2017), 82 FR 25448 (June 1, 2017); 80809 (May 30, 2017), 82 FR 25837 (June 5, 2017); 80822 (May 31, 2017), 82 FR 26148 (June 6, 2017); and 80821 (May 31, 2017), 82 FR 26177 (June 6, 2017). On June 30, 2017, the Commission temporarily suspended the proposed rule changes and instituted proceedings to determine whether to approve or disapprove the proposed rule changes. See Securities Exchange Act Release No. 81067, 82 FR 31656 (July 7, 2017). \19\ 17 CFR 242.608. --------------------------------------------------------------------------- Fee Dispute Resolution The proposals state that disputes initiated by an Industry Member with respect to CAT Fees charged to such Industry Member, including disputes related to the designated tier and the fee calculated pursuant to such tier, shall be resolved by the Operating Committee, or a Subcommittee designated by the Operating Committee, pursuant to the Fee Dispute Resolution Procedures adopted by the Operating Committee pursuant to the CAT NMS Plan.\20\ The proposals further indicate that decisions on such matters shall be binding on Industry Members, without prejudice to the rights of any such Industry Member to seek redress from the Commission or in any other appropriate forum.\21\ --------------------------------------------------------------------------- \20\ See, e.g., Notice, supra note 7, at 27905. The Participants also represent that the Fee Dispute Resolution Procedures were modeled after the adverse action procedures adopted by various exchanges and that such Procedures will be posted on the CAT NMS Plan Web site (www.catnmsplan.com). See, e.g., id. \21\ See, e.g., id. --------------------------------------------------------------------------- Under the Fee Dispute Resolution Procedures, an Industry Member that disputes CAT Fees charged to such Industry Member and that desires to have an opportunity to be heard with respect to such disputed CAT Fees must file a written application with the Company within 15 business days after being notified of such disputed CAT Fees.\22\ The application must identify the disputed CAT Fees, state the specific reasons why the applicant takes exception to such CAT Fees, and set forth the relief sought.\23\ In addition, if the applicant intends to submit any additional documents, statements, arguments or other material in support of the application, the same should be so stated and identified under the Fee Dispute Resolution Procedures.\24\ --------------------------------------------------------------------------- \22\ See, e.g., id. \23\ See, e.g., id. \24\ See, e.g., id. --------------------------------------------------------------------------- The Participants state that the Company will refer applications for hearing and review promptly to the Fee Review Subcommittee designated by the Operating Committee with responsibility for conducting the reviews of CAT Fee disputes pursuant to these Fee Dispute Resolution Procedures.\25\ The proposals note that the Fee Review Subcommittee will keep a record of the proceedings.\26\ --------------------------------------------------------------------------- \25\ See, e.g., id. The Participants further indicate that the members of the Fee Review Subcommittee will be subject to the provisions of Section 4.3(d) of the CAT NMS Plan regarding recusal and Conflicts of Interest. See, e.g., id. \26\ See, e.g., id. --------------------------------------------------------------------------- The proposals further specify that the Fee Review Subcommittee will hold hearings promptly and will set a hearing date.\27\ Under the proposed rule changes, the parties to the hearing shall furnish the Fee Review Subcommittee with all materials relevant to the proceedings at least 72 hours prior to the hearing, and each party will have the right to inspect and copy the other party's materials prior to the hearing.\28\ --------------------------------------------------------------------------- \27\ See, e.g., id. \28\ See, e.g., id. --------------------------------------------------------------------------- The Participants state that the parties to the hearing will consist of the applicant and a representative of the Company who shall present the reasons for the action taken by the Company that allegedly aggrieved the applicant.\29\ The applicant is entitled to be accompanied, represented and advised by counsel at all stages of the proceedings under the proposed rule changes.\30\ --------------------------------------------------------------------------- \29\ See, e.g., id. \30\ See, e.g., id. --------------------------------------------------------------------------- The proposals further indicate that the Fee Review Subcommittee will determine all questions concerning the admissibility of evidence and will otherwise regulate the conduct of the hearing.\31\ Each of the parties will be permitted, under the proposed rule changes, to make an opening statement, present witnesses and documentary evidence, cross examine opposing witnesses and present closing arguments orally or in writing as determined by the Fee Review Subcommittee.\32\ In addition, the Fee Review Subcommittee will have the right to question all parties and witnesses to the proceeding.\33\ The proposals require the Fee Review Subcommittee to keep a record of the hearing, to set forth its decision in writing, and to send the written decision to the parties to the proceeding.\34\ Such decisions must contain the reasons supporting the conclusions of the Fee Review [[Page 44012]] Subcommittee under the proposed rule changes.\35\ --------------------------------------------------------------------------- \31\ See, e.g., id. The proposed rule changes note, however, that the formal rules of evidence will not apply. \32\ See, e.g., id. \33\ See, e.g., id. \34\ See, e.g., id. \35\ See, e.g., id. --------------------------------------------------------------------------- The Participants state that the decision of the Fee Review Subcommittee will be subject to review by the Operating Committee either on its own motion within 20 business days after issuance of the decision or upon written request submitted by the applicant within 15 business days after issuance of the decision.\36\ The applicant's petition for review must be in writing and must specify the findings and conclusions to which the applicant objects, together with the reasons for such objections.\37\ According to the proposed rule changes, any objection to a decision not specified in writing will be considered to have been abandoned and may be disregarded.\38\ The proposed rule changes allow parties to petition to submit a written argument to the Operating Committee and to request an opportunity to make an oral argument before the Operating Committee.\39\ The Operating Committee will then have sole discretion to grant or deny either request.\40\ --------------------------------------------------------------------------- \36\ See, e.g., id. at 27905-27906. \37\ See, e.g., id. at 27906. \38\ See, e.g., id. \39\ See, e.g., id. \40\ See, e.g., id. --------------------------------------------------------------------------- Under the proposed rule changes, any review conducted by the Operating Committee will be made upon the record and will be made after such further proceedings, if any, as the Operating Committee may order.\41\ Based upon such record, the Operating Committee may affirm, reverse or modify, in whole or in part, the decision of the Fee Review Subcommittee.\42\ The Participants state that the decision of the Operating Committee will be in writing, will be sent to the parties to the proceeding, and will be final.\43\ --------------------------------------------------------------------------- \41\ See, e.g., id. \42\ See, e.g., id. \43\ See, e.g., id. --------------------------------------------------------------------------- A final decision regarding the disputed CAT Fees by the Operating Committee, or the Fee Review Subcommittee (if there is no review by the Operating Committee), must be provided within 90 days of the date on which the Industry Member filed a written application regarding disputed CAT Fees with the Company.\44\ The proposed rule changes indicate, however, that the Operating Committee may extend the 90-day time limit at its discretion.\45\ The Fee Dispute Resolution Procedures also state that any time limits for the submission of answers, petitions or other materials may be extended by permission of the Operating Committee.\46\ --------------------------------------------------------------------------- \44\ See, e.g., id. \45\ See, e.g., id. \46\ See, e.g., id. --------------------------------------------------------------------------- Finally, the Participants state that an Industry Member that files a written application with the Company disputing CAT Fees in accordance with the Fee Dispute Resolution Procedures is not required to pay such CAT Fees until the dispute is resolved in accordance with the Procedures, including any review by the Commission or in any other appropriate forum.\47\ The Participants state that, if it is determined that the Industry Member owes any of the disputed CAT Fees, then the Industry Member must pay such disputed CAT Fees that are owed as well as interest on such disputed CAT Fees from the original due date until such disputed CAT Fees are paid at a per annum rate equal to the lesser of (i) the Prime Rate plus 300 basis points, or (ii) the maximum rate permitted by applicable law.\48\ --------------------------------------------------------------------------- \47\ See, e.g., id. The Participants clarify that the Industry Member may only withhold any invoiced CAT Fees that the Industry Member has disputed; under the proposed rule changes, the Industry Member must pay any invoiced CAT Fees that are not disputed when such fees are due, as set forth in the invoice. See, e.g., id. \48\ See, e.g., id. --------------------------------------------------------------------------- III. Discussion and Commission Findings After carefully considering the proposed rule changes, the Commission finds that the proposals, as modified by the Amendments, are consistent with the requirements of the Act and the rules and regulations thereunder applicable to national securities exchanges and national securities associations.\49\ Specifically, the Commission finds that the proposed rule changes are consistent with Section 6(b)(5) \50\ and Section 15A(b)(6) \51\ of the Act, which require, among other things, that the rules of a national securities exchange or national securities association be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest, and are not designed to permit unfair discrimination between customers, issuers, brokers or dealers. In addition, the Commission finds that the proposed rule changes are consistent with Section 6(b)(8) \52\ and Section 15A(b)(9) \53\ of the Act, which require that the rules of a national securities exchange or national securities association not impose any burden on competition that is not necessary or appropriate. --------------------------------------------------------------------------- \49\ In approving these proposed rule changes, the Commission has considered the proposed rules' impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). The Commission notes that on August 30, 2017, the Commission approved the proposed rule changes filed by the other Participants to the CAT NMS Plan to establish procedures for resolving potential disputes related to CAT Fees charged to Industry Members, as modified by such amendments. See Securities Exchange Act Release No. 81500 (August 30, 2017), 82 FR 42143 (September 6, 2017). \50\ 15 U.S.C. 78f(b)(5). \51\ 15 U.S.C. 78o-3(b)(6). \52\ 15 U.S.C. 78f(b)(8). \53\ 15 U.S.C. 78o-3(b)(9). --------------------------------------------------------------------------- The Commission believes that the proposals are consistent with Section 6(b) \54\ and Section 15A(b) \55\ of the Act in general, and furthers the objectives of Section 6(b)(5) \56\ and Section 15A(b)(6) \57\ of the Act in particular, because they are designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest, by providing a uniform mechanism by which Industry Members may dispute CAT Fees and receive a timely review of such disputes. The Commission notes that the Fee Dispute Resolution Procedures provide for a hearing before the Fee Review Subcommittee, and if the Industry Member is not satisfied with the decision of the Fee Review Subcommittee, it may request a review of the decision by the Operating Committee. Further, the proposals provide that, although the decisions of the Operating Committee or Fee Review Subcommittee are binding on an Industry Member, the Industry Member may seek redress from the Commission or in any other appropriate forum. --------------------------------------------------------------------------- \54\ 15 U.S.C. 78f(b). \55\ 15 U.S.C. 78o-3(b). \56\ 15 U.S.C. 78f(b)(5). \57\ 15 U.S.C. 78o-3(b)(6). --------------------------------------------------------------------------- The Commission also notes that the proposals implement Section 11.5 of the CAT NMS Plan.\58\ Specifically, Section 11.5 states that the Participants will adopt rules requiring that disputes with respect to fees charged to Industry Members pursuant to Article XI of the CAT NMS Plan be determined by the Operating Committee or a designated Subcommittee. Section 11.5 further provides that such fee disputes will be determined by the Operating Committee or a designated Subcommittee, and that decisions on such matters will be binding on Industry Members without prejudice to the rights of any Industry Member to seek redress from the [[Page 44013]] Commission pursuant to Rule 608 of Regulation NMS or in any other appropriate forum. --------------------------------------------------------------------------- \58\ The Commission previously approved the CAT NMS Plan. See supra note 17. --------------------------------------------------------------------------- IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule changes (SR-CHX-2017-11; SR-FINRA-2017-020), as modified by the Amendments, are approved. --------------------------------------------------------------------------- \59\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\59\ Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-19968 Filed 9-19-17; 8:45 am] BILLING CODE 8011-01-P
![44010 Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices
Internet Web site (http://www.sec.gov/ ‘‘Participants’’) 3 filed with the The Commission received no comments
rules/sro.shtml). Copies of the Securities and Exchange Commission in response to the proposed rule
submission, all subsequent (‘‘Commission’’), pursuant to Section changes. On September 6, 2017, CHX
amendments, all written statements 19(b)(1) of the Securities Exchange Act filed Amendment No. 1 to its proposed
with respect to the proposed rule of 1934 (‘‘Act’’) 4 and Rule 19b–4 rule change,11 and on September 13,
change that are filed with the thereunder,5 proposed rule changes to 2017, FINRA filed Amendment No. 2 to
Commission, and all written establish the procedures for resolving its proposed rule change.12 This order
communications relating to the potential disputes related to CAT Fees approves the proposed rule changes, as
proposed rule change between the charged to Industry Members.6 The modified by the Amendments.13
Commission and any person, other than proposed rule change submitted by CHX
II. Description of the Proposed Rule
those that may be withheld from the was published for comment in the
Changes, as Modified by the
public in accordance with the Federal Register on June 19, 2017.7 The
Amendments 14
provisions of 5 U.S.C. 552, will be proposed rule change submitted by
available for Web site viewing and FINRA was published for comment in The Participants filed with the
printing in the Commission’s Public the Federal Register on July 6, 2017.8 Commission, pursuant to Section 11A of
Reference Room, 100 F Street NE., Pursuant to Section 19(b)(2) of the Act,9 the Act 15 and Rule 608 of Regulation
Washington, DC 20549, on official the Commission designated a longer
period within which to approve, also Securities Exchange Act Release No. 81110
business days between the hours of (July 10, 2017), 82 FR 32598 (July 14, 2017); 81112
10:00 a.m. and 3:00 p.m. Copies of the disapprove, or institute proceedings to (July 10, 2017), 82 FR 32592 (July 14, 2017); 81113
filing also will be available for determine whether to approve or (July 10, 2017), 82 FR 32596 (July 14, 2017); 81156
inspection and copying at the principal disapprove the proposed rule changes.10 (July 18, 2017), 82 FR 34337 (July 24, 2017); 81157
(July 18, 2017), 82 FR 34338 (July 24, 2017); 81158
office of the Exchange. All comments (July 18, 2017), 82 FR 34339 (July 24, 2017); 81159
3 The Commission notes that Bats BYX Exchange,
received will be posted without change; (July 18, 2017), 82 FR 34338 (July 24, 2017); 81161
Inc. (‘‘Bats BYX’’), Bats BZX Exchange, Inc. (‘‘Bats
the Commission does not edit personal BZX’’), Bats EDGA Exchange, Inc. (‘‘Bats EDGA’’),
(July 18, 2017), 82 FR 34337 (July 24, 2017); 81162
(July 18, 2017), 82 FR 34336 (July 24, 2017); 81164
identifying information from Bats EDGX Exchange, Inc. (‘‘Bats EDGX’’), BOX (July 18, 2017), 82 FR 34346 (July 24, 2017); 81165
submissions. You should submit only Options Exchange LLC (‘‘BOX’’), C2 Options (July 18, 2017), 82 FR 34345 (July 24, 2017); 81166
information that you wish to make Exchange, Inc., Chicago Board Options Exchange, (July 18, 2017), 82 FR 34345 (July 24, 2017); 81167
Incorporated (‘‘CBOE’’), Investors Exchange LLC (July 18, 2017), 82 FR 34337 (July 24, 2017); 81178
available publicly. All submissions (‘‘IEX’’), Nasdaq ISE, LLC (‘‘ISE’’), Nasdaq MRX, (July 20, 2017), 82 FR 34715 (July 26, 2017); 81179
should refer to File Number SR–CBOE– LLC (‘‘MRX’’), Miami International Securities (July 20, 2017), 82 FR 34716 (July 26, 2017); 81180
2017–060 and should be submitted on Exchange, LLC (‘‘MIAX’’), MIAX PEARL, LLC, The (July 20, 2017), 82 FR 34728 (July 26, 2017); and
or before October 11, 2017. NASDAQ Stock Market LLC (‘‘Nasdaq’’), NASDAQ 81181 (July 20, 2017), 82 FR 34727 (July 26, 2017).
BX, Inc. (‘‘BX’’), Nasdaq GEMX, LLC (‘‘GEMX’’), 11 Amendment No. 1 is available on the
For the Commission, by the Division of NASDAQ PHLX LLC (‘‘Phlx’’), New York Stock Commission’s Web site for CHX at: https://
Trading and Markets, pursuant to delegated Exchange LLC (‘‘NYSE’’), NYSE Arca, Inc. (‘‘NYSE www.sec.gov/comments/sr-chx-2017-11/chx201711-
authority.11 Arca’’), NYSE MKT LLC (‘‘NYSE MKT’’) and NYSE 2433023-161039.pdf.
National, Inc. are also deemed ‘‘Participants’’ for 12 Amendment No. 2 replaced and superseded
Eduardo A. Aleman, purposes of this Order as they, like CHX and Amendment No. 1 in its entirety. Amendment No.
Assistant Secretary. FINRA, are also Participants of the National Market 2 is available on the Commission’s Web site for
[FR Doc. 2017–19966 Filed 9–19–17; 8:45 am] System Plan Governing the Consolidated Audit FINRA at: https://www.sec.gov/comments/sr-finra-
Trail (‘‘CAT NMS Plan’’ or ‘‘Plan’’). See infra note 2017-020/finra2017020-2442749-161061.pdf.
BILLING CODE 8011–01–P 17. The Commission also notes that CHX refers to 13 The Amendments amended the original filings
Participants of the Plan as ‘‘Plan Participants’’ in its to make technical changes to the proposed rule
proposal. changes. Specifically, each Participant amended the
4 15 U.S.C. 78s(b)(1).
SECURITIES AND EXCHANGE proposed rule text to remove references to proposed
5 17 CFR 240.19b–4. ‘‘Consolidated Audit Trail Funding Fees,’’ as such
COMMISSION
6 Bats BYX, Bats BZX, Bats EDGA, Bats EDGX, fees are currently suspended, and replaced such
BOX, CBOE, IEX, ISE, MRX, MIAX, Nasdaq, BX, term with the phrase ‘‘any fees contemplated by the
[Release No. 34–81616; File Nos. SR–CHX– GEMX, Phlx, NYSE, NYSE Arca and NYSE MKT CAT NMS Plan and imposed on Industry Members
2017–11; SR–FINRA–2017–020] also submitted proposed rule changes to establish pursuant to [SRO] Rules.’’ See infra note 18. Each
procedures for resolving potential disputes related Participant also removed references to
to CAT Fees charged to Industry Members. See ‘‘Consolidated Audit Trail Funding Fees’’ from
Self-Regulatory Organizations; paragraphs (a)(1), (b) and (c)(1) of the proposed rule
Securities Exchange Act Release Nos. 80780 (May
Chicago Stock Exchange, Inc.; 26, 2017), 82 FR 25382 (June 1, 2017); 80781 (May text. The Amendments are not subject to notice and
Financial Industry Regulatory 26, 2017), 82 FR 25369 (June 1, 2017); 80782 (May comment because they are technical amendments
Authority, Inc.; Order Approving 26, 2017), 82 FR 25379 (June 1, 2017); 80837 (June that do not materially alter the substance of the
1, 2017), 82 FR 26526 (June 7, 2017); 80836 (June proposed rule changes or raise any novel regulatory
Proposed Rule Changes, as Modified issues. The Commission notes that on August 30,
1, 2017), 82 FR 26539 (June 7, 2017); 80834 (June
by Amendments, To Adopt a 1, 2017), 82 FR 26542 (June 7, 2017); 80835 (June
2017, the Commission approved the proposed rule
Consolidated Audit Trail Fee Dispute changes filed by the other Participants to the CAT
1, 2017), 82 FR 26549 (June 7, 2017); 80833 (June
NMS Plan to establish procedures for resolving
Resolution Process 1, 2017), 82 FR 26529 (June 7, 2017); 80831 (June
potential disputes related to CAT Fees charged to
1, 2017), 82 FR 26536 (June 7, 2017); 80832 (June
Industry Members, as modified by such
September 14, 2017. 1, 2017), 82 FR 26523 (June 7, 2017); 80936 (June amendments. See Securities Exchange Act Release
15, 2017), 82 FR 28153 (June 20, 2017); 80952 (June No. 81500 (August 30, 2017), 82 FR 42143
I. Introduction 16, 2017), 82 FR 28540 (June 22, 2017); 80967 (June (September 6, 2017) (order approving proposed rule
19, 2017), 82 FR 28719 (June 23, 2017); 80968 (June changes by Bats BYX, Bats BZX, Bats EDGA, Bats
On June 5, 2017 1 and June 19, 2017,2 19, 2017), 82 FR 28705 (June 23, 2017); 80970 (June EDGX, BOX, CBOE, IEX, ISE, MRX, MIAX, Nasdaq,
Chicago Stock Exchange, Inc. (‘‘CHX’’) 19, 2017), 82 FR 28708 (June 23, 2017); 80971 (June BX, GEMX, Phlx, NYSE, NYSE Arca and NYSE
and Financial Industry Regulatory 19, 2017), 82 FR 28698 (June 23, 2017); and 80966 MKT to adopt a Consolidated Audit Trail Fee
sradovich on DSKBBY8HB2PROD with NOTICES
Authority, Inc. (‘‘FINRA’’) (each, ‘‘SRO’’ (June 19, 2017), 82 FR 28702 (June 23, 2017). Dispute Resolution Process), at 42144 n.19. See also
7 See Securities Exchange Act Release No. 80916
or ‘‘Participant;’’ collectively, the supra note 6.
(June 13, 2017), 82 FR 27904 (‘‘Notice’’). 14 The Commission notes that for purposes of this
8 See Securities Exchange Act Release No. 81053
Order, unless otherwise specified, capitalized terms
11 17 CFR 200.30–3(a)(12). (June 29, 2017), 82 FR 31366. used in this Order are defined as set forth in the
1 Chicago Stock Exchange, Inc. filed its proposed 9 15 U.S.C. 78s(b)(2). proposals, as modified by the Amendments, or in
rule change on June 5, 2017. 10 See Securities Exchange Act Release No. 81163 the CAT NMS Plan. See supra notes 11–12; see also
2 Financial Industry Regulatory Authority, Inc. (July 18, 2017), 82 FR 34343 (July 24, 2017); 81275 infra note 17.
filed its proposed rule change on June 19, 2017. (August 1, 2017), 82 FR 36836 (August 7, 2017). See 15 15 U.S.C. 78k–1.
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![Federal Register / Vol. 82, No. 181 / Wednesday, September 20, 2017 / Notices 44013
Commission pursuant to Rule 608 of concerning the purpose of and basis for longer charged with the migration of the
Regulation NMS or in any other the proposed rule change and discussed Exchange’s trading system to Nasdaq
appropriate forum. any comments it received on the INET technology. As explained above,
proposed rule change. The text of these the Exchange completed its migration to
IV. Conclusion
statements may be examined at the Nasdaq INET on July 31, 2017 and
It is therefore ordered, pursuant to places specified in Item IV below. The therefore does not provide access to the
Section 19(b)(2) of the Act, that the Exchange has prepared summaries, set ISE T7 test facility that was the subject
proposed rule changes (SR–CHX–2017– forth in sections A, B, and C below, of of this fee. Since the Exchange no longer
11; SR–FINRA–2017–020), as modified the most significant aspects of such provides this service, the Exchange
by the Amendments, are approved. statements. believes that removing the associated
For the Commission, by the Division of A. Self-Regulatory Organization’s fee from the Schedule of Fees will
Trading and Markets, pursuant to delegated Statement of the Purpose of, and reduce member confusion about
authority.59 services offered by the Exchange, and
Statutory Basis for, the Proposed Rule
Eduardo A. Aleman, Change the fees charged for those services.
Assistant Secretary. B. Self-Regulatory Organization’s
[FR Doc. 2017–19968 Filed 9–19–17; 8:45 am]
1. Purpose
Statement on Burden on Competition
BILLING CODE 8011–01–P The purpose of the proposed rule
change is to eliminate third party The Exchange does not believe that
developer fees from the Schedule of the proposed rule change will impose
SECURITIES AND EXCHANGE Fees. Currently, the Schedule of Fees any burden on competition that is not
COMMISSION contains third party developer fees, necessary or appropriate in furtherance
which were previously charged for third of the purposes of the Act. The
[Release No. 34–81610; File No. SR–ISE– Exchange is removing outdated third
2017–82] party developer access to the ISE T7 test
environment. Specifically, the Schedule party developer fees from the Schedule
Self-Regulatory Organizations; Nasdaq of Fees includes the following fees for of Fees as the related services will no
ISE, LLC; Notice of Filing and third party developers: (1) A $1,000 per long be offered with the completed
Immediate Effectiveness of Proposed month one time set-up fee, and (2) a migration of the Exchange to Nasdaq
Rule Change To Eliminate Third Party $1,000 per month usage fee. With the INET. As such, the Exchange does not
Developer Fees From the Schedule of migration of the Exchange to Nasdaq believe that the proposed rule change
Fees INET technology,3 which was will have any significant impact on
completed on July 31, 2017, and the competition.
September 14, 2017. upcoming decommissioning of the T7 C. Self-Regulatory Organization’s
Pursuant to Section 19(b)(1) of the trading system, including the test Statement on Comments on the
Securities Exchange Act of 1934 environment, the Exchange no longer Proposed Rule Change Received From
(‘‘Act’’),1 and Rule 19b–4 thereunder,2 charges these third party developer fees. Members, Participants, or Others
notice is hereby given that on The Exchange therefore proposes to
September 1, 2017, Nasdaq ISE, LLC remove these fees from the Schedule of No written comments were either
(‘‘ISE’’ or ‘‘Exchange’’) filed with the Fees. The Exchange believes that solicited or received.
Securities and Exchange Commission removing these fees from the Schedule III. Date of Effectiveness of the
(‘‘Commission’’) the proposed rule of Fees will reduce member confusion Proposed Rule Change and Timing for
change as described in Items I and II, about services offered by the Exchange, Commission Action
below, which Items have been prepared and the fees charged for those services,
by the Exchange. The Commission is The foregoing rule change has become
as with the migration to Nasdaq INET
publishing this notice to solicit effective pursuant to Section
no services are currently offered that
comments on the proposed rule change 19(b)(3)(A)(ii) of the Act,6 and Rule
could incur these charges.
from interested persons. 19b–4(f)(2) 7 thereunder. At any time
2. Statutory Basis within 60 days of the filing of the
I. Self-Regulatory Organization’s proposed rule change, the Commission
The Exchange believes that its
Statement of the Terms of Substance of summarily may temporarily suspend
proposal is consistent with Section 6(b)
the Proposed Rule Change such rule change if it appears to the
of the Act,4 in general, and furthers the
The Exchange proposes to eliminate objectives of Sections 6(b)(4) and 6(b)(5) Commission that such action is: (i)
third party developer fees from the of the Act,5 in particular, in that it Necessary or appropriate in the public
Schedule of Fees. provides for the equitable allocation of interest; (ii) for the protection of
The text of the proposed rule change reasonable dues, fees, and other charges investors; or (iii) otherwise in
is available on the Exchange’s Web site among members and issuers and other furtherance of the purposes of the Act.
at www.ise.com, at the principal office persons using any facility, and is not If the Commission takes such action, the
of the Exchange, and at the designed to permit unfair Commission shall institute proceedings
Commission’s Public Reference Room. discrimination between customers, to determine whether the proposed rule
issuers, brokers, or dealers. The should be approved or disapproved.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and Exchange believes that the proposed fee IV. Solicitation of Comments
Statutory Basis for, the Proposed Rule change is reasonable, equitable, and not
sradovich on DSKBBY8HB2PROD with NOTICES
Interested persons are invited to
Change unfairly discriminatory as it eliminates
submit written data, views, and
third party developer fees that are no
In its filing with the Commission, the arguments concerning the foregoing,
Exchange included statements 3 See Securities Exchange Act Release No. 80432
including whether the proposed rule
(April 11, 2017), 82 FR 18191 (April 17, 2017) (SR– change is consistent with the Act.
59 17 CFR 200.30–3(a)(12). ISE–2017–03).
1 15 U.S.C. 78s(b)(1). 4 15 U.S.C. 78f(b). 6 15 U.S.C. 78s(b)(3)(A)(ii).
2 17 CFR 240.19b–4. 5 15 U.S.C. 78f(b)(4) and (5). 7 17 CFR 240.19b–4(f)(2).
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Document Created: 2018-10-24 14:22:46
Document Modified: 2018-10-24 14:22:46
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 82 FR 44010 |
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